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Official Details Pentagon Health Care Proposals

WASHINGTON, March 21, 2012  The Defense Department’s top medical official today detailed in a Capitol Hill hearing the Pentagon’s strategy to corral health care costs while continuing to provide a high level of care.

Dr. Jonathan Woodson, assistant secretary of defense for health affairs, told the House Armed Services Committee that Defense Department leaders have sent four proposals to Congress designed to reduce costs while minimizing financial burdens on beneficiaries.

The 2011 Budget Control Act requires the Defense Department to identify $487 billion in budget reductions over the next 10 years, Woodson said. “Health care costs could not be exempt from this effort,” he told the panel.

-- Reducing illness, injury and hospitalization by emphasizing initiatives that promote health; and

-- Changing beneficiary cost-sharing in the TRICARE military health system.

Woodson, who also serves as director of the TRICARE Management Activity, told the committee the proposals mitigate the burden on any particular group of beneficiaries while meeting the department’s cost-saving mandate. He said he believes the TRICARE benefit has been one of the most comprehensive and generous health benefits in the country since its inception in the mid-1990s. He identified the “core principals” used to develop the four proposals.

“In 1996, military retirees were responsible for about 27 percent of overall TRICARE costs. In 2012, the percentage share of cost borne by beneficiaries has dropped to a little over 10 percent of overall cost,” he said. “If these proposals we put forward are accepted, beneficiary out-of-pocket costs will rise to 14 percent of cost by 2017. This is about half of what beneficiaries experienced in 1996.”

The most “vulnerable populations,” such as medically retired service members and families of fallen troops, are exempt from these cost-sharing changes under the proposal, Woodson told the committee. “Additionally, we introduced cost-sharing tiers based upon retirement pay, reducing the increases for those with lower retirement pays,” he said.

Lessons learned through joint medical operations over the last 10 years of war went into forming the proposals, Woodson said. “We recognize that there is much opportunity for introducing an even more agile headquarters operation that shares services and institutes common business plans and clinical practices across our system of care,” he told the representatives.

The fiscal 2013 budget proposal is a responsible path forward to sustaining the Military Health System in a changing world, Woodson said, and recognizes that the fiscal health of the country is a vital element of national security.

Woodson praised military medical personnel for their service over the past decade and said he remains committed to ensuring their success.

“Over the last 10 years, the men and women serving in the Military Health System have served with great skill and undeniable courage in combat,” he said. “Their contributions to advancing military and American medicine are immense.

“The budget we have proposed provides the resources we need to sustain the system,” he continued. “As we maintain our readiness, we must also be responsible stewards of the taxpayer’s dollars. I am committed to sustaining this indispensable instrument of national security.”